The Morning Call
3/9/26
The
Market
Technical
The S&P appears to be breaking below that
tight trading range between the all-time high and its 100 DMA. Last week, it
marked two lower highs and one lower low; and if remains below its 100 DMA at
the close today, it will reset that DMA to resistance. I am actually surprised
that the index has held up as well as it has given the fall out from the Iran
war (higher oil prices/impending inflation) and the deterioration in the private
credit market (threat to the financial system). If we get a lower close today, I
think that we have to start hoping that the 200 DMA (~6582) or the 23.6% Fibonacci
retracement level (~6483) will be the floor.
Monday mayhem
setup.
The bond market crumbled
last week, halting the prior week’s advance, trading below its 100 DMA (if it remains
there through the close today it will revert to resistance) and appears ready
to challenge both its 50 and 200 DMAs. The driving force being the fear of
inflation (via higher oil prices). It remains in a very short term trading
range and in downtrends across all major timeframes. I suppose a crisis in the
private credit market would temper that decline but would be a catastrophe for other
credit markets. Barring a quick resolution to the war and credit crisis, I would
expect more downside.
Last Tuesday’s
selloff notwithstanding, gold continued its recovery, remaining above all three
DMAs and in uptrends across all major timeframes. On the other hand, rising interest
rates and a stronger dollar are historically not good for gold, so the worst may
not be over. So, like everything else, its future course is dependent on the
outcome of the war and the credit crisis---to which I have not a clue. I
continue to hold my trading position in GDX.
The dollar (1) continued its bounce off the lower boundaries
of its intermediate term uptrend and short term trading range and (2) reset its
50 DMA to support. And that huge gap down open has yet to be completely filled.
However, it met resistance at its 100 and 200 DMAs. This week’s pin action will
likely tell which one of these forces (momentum/gap down open versus 100/200
DMAs) is the strongest.
Friday in the
charts.
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
The latest from Goldman’s
desk.
From Goldman’s
commodity desk.
Oil volatility spiking.
https://www.zerohedge.com/the-market-ear/oil-volatility-hits-103-global-panic-builds
Fundamental
Headlines
The
Economy
It
was another upbeat week for US stats with the primary indicators mixed (one up,
one neutral, one down) and no inflation data. While that is supportive of a
‘muddle through’ scenario, the effects of the Iran war have yet to make their way
into the numbers and those will likely be negative. I am not going to change my
forecast just yet, but the yellow flag is waving.
https://www.capitalspectator.com/early-impact-of-iran-war-is-low-but-economic-risks-are-rising/
My
‘inflation is as good as it is going to get’ forecast unfortunately has gotten a
major boost from war with the price of oil and its downstream effects being the
major culprit. While we haven’t seen it in the US data yet, last week witnessed
three negative price indicators in the overseas stats. (The overall international
numbers were also quite negative.)
Of
course, the Iran war and its side effects (primarily the closing of the Strait
of Hormuz) were the leading headlines of the week. While we are experiencing
the short term impact of this development (higher oil prices), unfortunately,
we have no way of knowing what the longer term geopolitical or economic
outcomes will be. Although the one thing that we do know is that the longer it
lasts, the greater the damage.
As
to the longer term impact, while I understand what Trump is trying to do (see
below), history tells us (Vietnam, Iraq, Afghanistan) that American firepower
has a limited ability to assure the accomplishment of the US’s initial goals
and indeed has the unintended consequences of (1) severely dividing the
American people against themselves [something
we hardly need more of] and (2) introducing inflationary forces into the economy
[also something we hardly need more of].
At this point, I think that all we can do is pray for a speedy
resolution and have enough dry powder to sleep at night.
https://nypost.com/2026/03/04/business/why-wall-street-isnt-panicking-over-the-iran-war-yet/
Trump realigning world energy markets.
https://www.foxnews.com/opinion/trump-realigning-world-energy-markets-iran-strikes-actually-helping
And.
To
make matters worse, the losses in the private credit market continue to pile up.
Given the lack of public disclosure, we have no way of knowing just how acute
this problem is. If you believe the players in this Market segment, these
incidents are simply a part of lending in an above average risk market segment.
On the other hand, if you remember the circumstances that led to the great financial
crisis, you recognize an all too familiar pattern of human behavior.
I have
no clue how either of these situations resolves itself. But I can’t see how the
uncertainty surrounding them can have a positive effect on the Market---and the
longer that uncertainty exists the more likely the impact will be negative.
https://talkmarkets.com/article/everything-is-breaking-at-once-and-the-worst-may-be-ahead-1772819957
US
International
The January
Japanese leading economic indicators came in at 112.4 versus consensus of
113.2.
January German
factory orders were down 11.1% versus expectations of -4.3%; January industrial
production was down 0.5% versus +0.9%.
The February
Chinese CPI rose 1.0% versus forecasts of +0.3%.
Other
Update on big four recession indicators.
https://www.advisorperspectives.com/dshort/updates/2026/03/06/the-big-four-recession-indicators
The February jobs report: main street lays an
egg.
https://bonddad.blogspot.com/2026/03/february-jobs-report-main-street-lays.html
The economic week ahead.
ECONOMIC
WEEK AHEAD: March 8-12
Iran
How Saudi Arabia views the Iran war.
https://www.bloomberg.com/features/2026-bernard-haykel-weekend-interview/?srnd=homepage-americas
Kuwait cuts oil production.
Battle of oil refineries.
Iran strikes Bahrain desalinization plant.
https://www.zerohedge.com/military/iran-foreign-minister-claims-us-attacked-desalination-plant
Goldman panics: oil at
$100/barrel.
US
intelligence agencies assessed that bombing campaign was unlikely to oust Iranian
leadership.
Hormuz disruption ignites
food inflation fears.
https://www.zerohedge.com/the-market-ear/war-wheat-hormuz-disruption-ignites-food-inflation-fears
Monetary
Policy
Update on the Fed’s balance sheet.
Inflation
Jet fuel prices are soaring.
https://sherwood.news/markets/jet-fuel-refining-margins-are-surging-to-20-year-highs-amid-iran-war/
AI
Just how bad is it going to get?
https://www.nytimes.com/2026/03/05/opinion/ai-jobs-white-collar-apocalpyse.html
Tariffs
Refunds. Don’t hold your breath.
The Financial System
Insurance
companies the next domino.
https://www.zerohedge.com/markets/insurance-companies-crushed-private-credit-contagion-spills-over
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